King & Whittle December 2023 Newsletter
It’s December – the month that always seem to race by as we approach the end of the year and all the festivities it brings. We hope you all have a lovely, happy, and safe festive season.
On the economic news front, there was some good news. Consumer prices eased by more than expected in October. The news that inflation may have been tamed means interest rate rises may be behind us, for now. The positive data also led to a jump in the Australian dollar, taking it to a new four-month high.
Retail spending slowed in October after a short-lived boost in August and September. But, in a further sign of good times ahead, business investment in the September quarter increased by 0.6% to almost $40 billion.
In mixed outcomes for sharemarket investors, there were some devastating lows this year, and a flat performance as November ended, but the ASX200 is up 4 points since the beginning of the year. The unemployment rate has increased slightly to 3.7% with an extra 27,900 people out of work in October.
Overseas, China’s plan to bolster support for infrastructure drove iron ore prices 36% higher than the low in May. Although prices slipped $4 in November from a one-year high of $138 per tonne. While oil prices have steadied with cuts to production on the table to reduce stocks. Brent crude ended the month at around $83.
King & Whittle offices will be closed for the Holiday Season from 12noon on Friday December 22nd 2023, and will reopen on Tuesday 9th January, 2024.
As we embrace the Festive Holiday Season and the promises of the year ahead dawns, all of us at King & Whittle wish you a peaceful and prosperous “Happy New Year” .
We thank you for your support in the past and wish you a healthy, happy and successful year in 2024!
It has been a pleasure to work with you and we are excited to continue to assist you in your future journey
Market movements and review video – December 2023
Stay up to date with what's happened in markets and the Australian economy over the past month.
Consumer prices eased by more than expected in October. The news that inflation may have been tamed means interest rate rises may be behind us, for now.
Even the Organization for Economic Cooperation and Development (OECD) is optimistic about our economic recovery, predicting rate cuts from late 2024.
The ASX200 regained most of its October losses through November. Hopes the US may be ceasing its interest rate hikes impacted investor sentiment, as did the better than expected inflation figures locally.
Click the video below to view our update.
View Video
Please get in touch if you’d like assistance with your personal financial situation.
Tax Alert December 2023
The ATO is getting back to business
The lenient approach taken by the ATO during the pandemic is over, with its focus now returning to traditional debt collection. With several key areas under the spotlight, some small businesses should consider taking advantage of the current amnesty to get their reporting in order. Here’s some of the latest developments in the world of tax.
Reminder on late lodgment amnesty
If your small business is not up-to-date with its tax lodgments, it’s worth noting the government’s current Lodgment Penalty Amnesty ends on 31 December 2023.
The amnesty allows small businesses to lodge any outstanding income tax and FBT returns or business activity statements (BAS) due between 1 December 2019 and 28 February 2022 without lodgment penalties being applied (general interest charges still apply).
Businesses with an annual turnover under $10 million when the original lodgment was due are eligible for the amnesty.
Warning on ATO’s ‘back to business’ focus
In recent speeches, the ATO has put small business on notice that its lenient attitude during the pandemic is being replaced with a much tougher approach designed to re‑establish its traditional culture of ensuring taxpayers pay on time.
With collectable debt rising dramatically over the past four years, the ATO is returning to its normal debt collection stance and is taking firmer action with taxpayers.
Five areas the ATO is particularly focussing on are unpaid Super Guarantee Charge; debt arising from ATO audit adjustments; refund fraud; aged, high-value debts; and employers with new self-assessed debt.
Employer SG compliance under the microscope
The ATO is expanding its use of the information reported by employers through the Single Touch Payroll (STP) system in relation payment of employees’ Super Guarantee (SG).
Employers are required to make SG payments quarterly and the ATO is now using STP and Member Account Transaction Service information to check whether an employer has paid on time.
The new checks will help the ATO follow-up non-compliant employers and prepare for the introduction of the new rules requiring employers to make SG payments at the same time as wages, which commence on 1 July 2026.
Sharing economy reporting expands
Businesses connecting customers with people who provide services or hiring personal assets through a website or app are increasingly being added to the Sharing Economy Reporting Regime (SERR).
Platforms providing taxi services (including ride-sourcing) and short-term accommodation were required to start collecting seller transaction information from 1 July 2023.
From 1 July 2024, all other sharing economy platforms will be required to start collecting and reporting personal and contact details, business information and financial identifiers related to transactions twice a year to the ATO.
Tax residency test updates
A new one-stop shop tax ruling to help people self-assess their residency for tax purposes has been released by the ATO to help people going to work overseas or moving to Australia.
Taxation Ruling TR 2023/1 replaces older tax rulings with more contemporary guidance reflecting modern global work practices and recent court decisions. It also contains information on the 183-day residency test for people arriving on short-term work and holiday visas.
The tax office uses different rules to the Department of Home Affairs, meaning it is possible to be an Australian resident for tax purposes without being a citizen or permanent resident.
SMSF promoter scheme warning
The ATO is once again reminding trustees of self-managed super funds (SMSFs) to be wary of people promoting illegal schemes for early access to super.
Warning signs of an illegal scheme can include claims you can access your super and put it towards anything you want, charging high fees and commissions, and requesting your identity documents.
Anyone approached about these types of schemes should not sign any documents or provide any personal details, and should immediately report the interaction to the ATO.
Keep your ABN details updated
Ensuring your ABN details are up-to-date on the Australian Business Register is an important requirement of being in business.
Without it, you could also miss out on valuable financial assistance or government information.
Emergency services and government agencies also use ABN details to identify businesses in areas affected by emergencies, so it’s important to keep your physical business and postal address current.
Making sure your deductions don’t get personal
It can be easy to overlook your personal use of business assets when it comes to completing your business and self managed super fund tax returns but be warned, the ATO is taking an interest in this area.
The ATO’s Small Business Random Enquiry Program found around 16 per cent of small businesses were either carelessly or deliberately overclaiming expenses in their tax returns.
If business assets are used for a mix of business and private use – such as vehicles and phones - the amount claimed must reflect only the business-related portion of the expense.
The ATO is urging taxpayers to remember this rule when claiming business-related deductions, including those for work-from-home expenses (such as internet and mobile phone usage), and work vehicles.
Rental properties under the spotlight
Holiday home rentals are also an area where many taxpayers are failing to follow the tax rules.
Deductions for holiday home expenses can only be claimed to the extent they relate to producing rental income, so you need to apportion your expenses if the property is only genuinely available for rent part of the year.
Apportionment is also required if you use the property for private purposes during the year, only use part of it to earn rent, or if it is used by family or friends at various times during the year.
Expenses relating solely to the rental of the property (such as agent commissions and advertising costs), don’t need to be apportioned.
Avoiding mistakes
To ensure you don’t invite attention from the ATO, review your treatment of business asset expenses annually, in case your private usage has changed.
New or additional private usage of the asset means you need to recalculate the percentage of business used to determine the correct deduction claim.
Proper business records explaining all relevant transactions (including payment to and receipts from employees, shareholders and associates) need to be kept to support your claims.
Common taxpayer errors
The ATO says there are some common errors when it comes to claiming deductions.
Taxpayers are not permitted to claim any deductions against business income for expenses relating to an asset entirely used for private purposes.
An example is an asset (such as a boat or plane) purchased and used for private purposes.
Deductions can only be claimed for the relevant percentage of business use. For example, if the private use component represents 60 per cent, only 40 per cent of the expense amount can be claimed in your return.
FBT and deemed dividends
Another common mistake is claiming a deduction for an asset giving rise to a deemed dividend. This arises when an asset is purchased through a company and used for private purposes by a company shareholder or their associates.
Under the tax rules, both the company and the dividend recipient must record such dividends in their income tax returns, as the asset is being used for their personal benefit.
Some small businesses also misunderstand the implications of purchasing an asset (such as a motor vehicle), that is used by an employee or the associate of an employee for personal purposes.
When this occurs, the benefit must be reported in the business’s fringe benefit tax (FBT) return and the resulting FBT liability paid.
Fixing lodgement mistakes
To avoid finding your business in the ATO’s spotlight, check you have correctly apportioned all expense claims before lodging your business or SMSF return.
You also need to consider whether the rules for private company benefits and FBT apply to any of your business assets. If you make a mistake with a deduction claim, you will need to amend or lodge an income tax or FBT return to correct your tax position. There are time limits on both business and super amendments.
We can help you to correct any mistakes and to deal with the ATO to ensure your tax reporting is smooth and worry-free.
Powering down for a relaxing holiday
It’s nice to enjoy a break over the summer months. In fact, it’s an Aussie tradition - that mass exodus after Boxing Day that sees us head off for some well-earned rest and relaxation. However, it can be hard to unwind when we have a device in our pocket buzzing away every couple of minutes.
Even those who manage to resist taking work away with them and checking work emails while on holiday, can spend a lot of time on a digital device! And while you are glued to that device, chances are you are not ‘in the moment’ enjoying your time with family and friends fully or the delights of wherever you are vacationing.
Digital addiction
It’s not an overstatement to say that during our everyday lives we are glued to our devices. The average person spends around five and a half hours a day on their phone – that’s over two months over the course of a year!i
We also tend to check our phones on average around 8 times an hour - almost once every 8 minutes. And just over half of Aussies (50.65%) consider themselves addicted to their phones.ii Throw in the amount of time we spend on tablets, laptops and other devices and it’s clear we generally spend a lot of time in front of a screen.
A vacationing trend
A new trend that may help to curb our online addictions is known as a ‘digital detox’ holiday.
Resorts and lifestyle destinations have got on board and many offer wellness packages offering a respite from the fast pace of online life with no phones, texts, emails, social media use or web browsing for the duration of your stay.
You don’t have to fly off to an internet black spot or sign up for a digital detox retreat to get the benefits though. Doing your own digital detox can be as simple as switching your phone to airplane mode or better still turning your devices off for a designated time every day or for a period of time.
Breaking free
The benefits of getting away from a screen, even if it’s just for a short break, are numerous but the main benefit of having a proper digital detox is reducing stress. If your phone or tablet isn't buzzing, beeping or vibrating in your pocket or hand every few minutes, you start to breathe deeper and slow down.
Another plus of having a break from your device is the way it can affect the quality of your interactions with others. If you are not staring at a screen you open up opportunities to engage more fully with those around you. That means better quality time connecting with friends and family.
If you are a solo traveller, it can be challenging to not have the safety blanket of a phone in your hand, however there is something special about being more aware of your surroundings and taking in the little moments as they happen, without distractions.
Open to offline discovery
While tech can certainly make travel smoother in many ways, going phone free can open up opportunities for discovery. While it’s tempting to grab your phone to check the Google score of every restaurant you pass or using Maps to locate local attractions, it can be satisfying stumbling across a great little eating place tucked away down a laneway or finding a wonderful local market on your travels.
And when it comes to sharing your discoveries, you could also try keeping it offline. Instead of snapping moments to share immediately on social media, knowing you are going to be constantly distracted checking how your posts are being received, try to treasure those moments as they happen.
Whether you digitally detox for a few hours a day, a few days, or the duration of the holidays, your vacation will benefit from you unplugging for a bit. And who knows, you may even find some of your good digital detoxing habits follow you into the New Year.
i, ii https://www.reviews.org/au/mobile/2022-mobile-phone-usage-statistics/